Acquiring Firm Inventors’ Performance: Exploring the Alignment of Inventors’ Knowledge Base with Firms’ Innovation Trajectories

Innovation-sourcing acquisitions provide firms with rapid access to new knowledge, but their success depends on how effectively the acquiring firm integrates this knowledge. Prior research has focused on firm-level absorptive capacity, yet little is known about how such acquisitions affect inventors within acquiring firms who embody much of this capacity. The authors theorize that acquiring firm inventors’ postacquisition performance will be shaped by the interaction between their own knowledge and the firms’ characteristics, namely (a) the technological distance between the acquiring and target firms and (b) the alignment of the inventors’ knowledge with the firms’ postacquisition innovation trajectory. The authors argue that, although acquiring firm inventors generally experience a decline in postacquisition innovation performance, generalists face a smaller decline than specialists in distant acquisitions, and specialists experience a smaller decline than generalists in close acquisitions. Their predictions are conditional on whether the inventors continue to patent after the acquisition: inventors will be more likely to continue patenting when their knowledge base aligns with the firm’s postacquisition innovation trajectory. Using panel data on 334 pharmaceutical acquisitions between 1990 and 2007, they find support for their hypotheses.